If you’ve been thinking about settling your IRS debt through an Offer in Compromise (OIC), the next question is: how much will the IRS accept?

The answer comes down to one formula: Reasonable Collection Potential (RCP).

At Summit Tax Relief, we help Oklahoma taxpayers understand how this number works — and how to legally minimize it to increase the chances of IRS approval.

The IRS OIC Formula = Assets + Future Income

The IRS calculates your offer based on what they think they can realistically collect from you, using:

1. Net Realizable Equity (NRE) in assets
+
2. Disposable Monthly Income (DMI) over time
= Reasonable Collection Potential (RCP)

If your RCP is less than your total IRS debt, you may qualify for a settlement.

Step 1: IRS Valuation of Assets (Net Realizable Equity)

The IRS reviews everything you own, including:

• Home equity
• Bank accounts
• Retirement plans
• Vehicles
• Business assets
• Investments
• Collectibles or jewelry

They then reduce these values using standard discounts (e.g., 20% for quick sale, encumbrances on property, etc.) to arrive at net realizable equity.

Example:

• Your car is worth $10,000
• You owe $7,000 on the loan
• IRS allows a quick-sale discount (20%) → $10,000 × 0.8 = $8,000
• Equity = $8,000 – $7,000 = $1,000 equity

This process is done for all assets.

Step 2: Future Income Calculation

The IRS then calculates your monthly disposable income (DMI):

Gross income
– Allowable expenses (based on national/local IRS standards)
= DMI

Then they multiply it based on the payment option you choose:

IRS Calculation Example (Lump Sum Offer)

• Equity in assets = $5,000
• Disposable monthly income = $300
• Payment type = Lump sum (multiplied by 12)

RCP = $5,000 + ($300 × 12) = $8,600

This is the minimum amount the IRS will accept unless you prove special circumstances (like medical hardship).

How We Help Lower Your IRS Settlement

At Summit Tax Relief, we legally reduce your calculated offer by:

1. Verifying asset values and exclusions

• Many assets are exempt or overvalued
• We apply discounts and exclusions IRS often overlooks

2. Maximizing allowed expenses

• We apply national, local, and conditional expense allowances
• We show real-world necessity (e.g., high medical costs or dependent care)

3. Strategically choosing offer type

• Lump-sum vs. periodic payments have different impacts on your offer

4. Building a hardship narrative

• In qualifying cases, we show why collection isn’t in the IRS’s best interest — even if the math is close

Oklahoma-Specific Considerations

Cost-of-living in Oklahoma allows for greater flexibility when calculating allowed expenses compared to higher-cost states.

We know how to:

• Use IRS Local Standards specific to Oklahoma County
• Justify transportation, health insurance, and housing expenses at local rates
• Handle family-owned property or self-employed business structures

Why Work With Summit Tax Relief?

• Based in Oklahoma
• CPA-led, with 15+ years resolving complex IRS cases
• We don’t waste time submitting offers that will get rejected
• Flat-fee pricing — no billable hour games
• Trusted by business owners, retirees, and working families

Internal Links:

• Who Qualifies for an IRS Offer in Compromise?
• IRS Bank Levy in Oklahoma – What You Need to Know
• IRS Letter 1058 – Final Notice Before Levy

Get Help Now

The key to getting your IRS offer accepted is knowing what to offer — and how to support it.

Call Summit Tax Relief at (833) 477-4911
Schedule Your Free Strategy Call



FAQ

Q: Will the IRS accept any amount I offer?
A: No. The IRS will only accept an offer equal to or above your RCP, unless special hardship applies.

Q: Do I need to pay upfront?
A: Yes — 20% upfront for lump-sum offers, or the first monthly payment under the periodic option.

Q: Can my home be excluded from the calculation?
A: Not excluded, but the equity can often be minimized with proper documentation.

Q: What if I have no income?
A: If you truly cannot pay, and have no RCP, you may qualify for an offer of $0 settlement (yes, that’s possible).

📣 About the Author

Marc Boulanger, CPA is the founder of Summit Tax Relief LLC, based in Oklahoma City, OK.

With over a decade of experience helping individuals and businesses resolve serious IRS and State tax issues, Marc specializes in tax resolution strategies including Offers in Compromise, wage garnishment relief, and back tax compliance.

He is licensed as a Certified Public Accountant in both Oklahoma and California, and has a proven track record of helping clients settle complex tax debts and regain financial stability.

📍 Learn more at www.summittaxrelief.com or call (833) 477-4911.